Blackstone, First Reserve's PBF in $1bn refinery expansion

PBF, which is jointly owned by Blackstone and First Reserve, is expanding its Delaware City Refinery. The $1bn project will maximise crude oil processed at the refinery.

PBF Holding Company and the Delaware City Refining Company, known as PBF -a product of a $450 million Blackstone and First Reserve partnership which has an S-1 filing pending with the US Securities and Exchange Commission – is expanding a Delaware refinery.

The $1 billion expansion, dubbed the PBF Clean Fuels Project, has two components: a mild hydrocracker and a hydrogen plant, both of which will be constructed at the Delaware City Refinery.

Michael Gayda, PBF President, explained the significance of the project to Infrastructure Investor. “What the hydrocracker machine does is to take the existing product streams within the refinery that have lower value and increases their [worth.] It does this by taking out sulphur and by, in essence, adding hydrogen. Adding hydrogen to these complex mixtures changes the structure of the molecules and makes the heavy hydrocarbons into light hydrocarbons,” he said.

Although the cost for the project was disclosed, Gayda was quiet on the details of the financing, such as whether or not there may be a debt component, largely in light of the pending regulatory filing. “I can’t talk about financing at this point,” he said.

Gayda did, however, reveal the way the next several months will shape up for the project. “We must complete the engineering design aspect of it. We’re well along on that but it’s not complete. Then, we must go into permitting, which can take an extended period of time.”

Contingent on the permitting process, PBF aims to begin construction on the refinery expansion in the fall of 2012 with an anticipated completion date of 2014.